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Bond Issuance

Private or public placement to raise capital

Capital can be raised by the issuance of bonds through private or public placement. This practice allows entrepreneurs to attract capital without giving away equity.

 

Bonds

  • Bonds can be issued by a company, or a holding entity and may bear fixed or variable interest.

  • Bonds may also be structured through a securitisation vehicle (such as a securitisation company or a securitisation fund).

  • In this case the financial instrument offers investors exposure to the income stream of a receivable or other asset.

  • The securitisation undertaking may issue units/shares, certificates or bonds.

 

Bond Issuance via Luxemboug securitisation

 

 

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More details

Clearstream/Euroclear

Clearstream/Euroclear are financial services company specialised in  settlement and related securities services for cross-border transactions. This includes domestic and international bonds, equities, shares of investments funds, derivatives and units of mutual funds.

Having a very low risk profile and known as efficient and secure in issuing international debt, Clearstream/Euroclear help avoid risk and errors in international securities issuance thanks to their role as a central communication point among the several stakeholders involved in the process of subscription and redemption of such securities, instead of direct subscription in the register of the issuer. 

  • the acceptance of securities (through a Private Placement Memorandum (PPM) and allocation of an ISIN code beginning by XS)

  • the supervision of the creation of the securities the day of the issuance (with the Paying Agent) and the supervision of the Delivery Versus Payment (DVP) with the several counterparties (simultaneous exchange of securities vs. cash)

  • the follow-up of the scheduling of payments with the Paying Agent until the maturity of the securities, and of all the turnovers on the Nominal Amount of the issuance 

  • communication on all information to “participants” registered on these securities (“participants” means investors banks with a Clearstream or an Euroclear account ), on demand of the Paying Agent and the Issuer

Acceptance of securities 

  • a PPM or prospectus including the information requested by the two clearing houses 

  • a Paying Agent (and other functions if needed by the Issuer)

  • a Common Depositary for the Clearstream/Euroclear account (usually the Paying Agent). The Common Depositary must keep the Global Note, which (physically) represents the securities until maturity.

  • a Global Note Certificate authenticated by the Issuer for the full amount of the issue of the Note and which “physically” represents this issuance

Closing of the issuance

It can be shortly described as follow:

  • Allocation of an ISIN Code by Clearstream/Euroclear based on the draft of the PPM/Prospectus

  • Review and signature of the Paying Agency Agreement

  • Reception of the Global Note by the Agent (pdf, then original version), then safekeeping by the Central Securities Depositary

  • The Paying Agent creates securities on his account in Clearstream/Euroclear the day of the closing

  • he Issuer designates the counterparties of the closing (in Clearstream/Euroclear) to the Paying Agent and the quantity to be sold; the Paying Agent takes over the DVP with these counterparties the day of the closing

  • The Agent distributes the net proceed on his account cash designated in advance («Payment instructions from Issuer» in the Memo) to the Issuer, after outcome with all the counterparties

Post-Closing of the issuance

Payment of coupons are organised through the Paying Agent who can also play the role of Fiscal Agent, in charge of withholding the taxes due at source and paying the net to the bond/share holders).


The Issuer credits the Paying Agent account, who dispatches between Clearstream/Euroclear, which distributes to the participants (banks), which distribute to their clients (well-informed investors).




























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